Samsung Reshuffles Major CEOs To Integrate Its Mobile And Consumer Electronics Divisions

by Bhaswati Guha Majumder - Dec 8, 2021 12:40 PM +05:30 IST
Samsung Reshuffles Major CEOs To Integrate Its Mobile And Consumer Electronics DivisionsSamsung (Representative image)
Snapshot
  • The South Korean firm will be led by two co-chief executives, rather than three, as it pivots on the two core pillars of chips and consumer products, such as smartphones, to help drive the next phase of growth and increase competitiveness.

Samsung Electronics Co Ltd announced on 7 December that it will merge the mobile and consumer electronics businesses, designating new co-chief executives, in the company's biggest change since 2017, in order to simplify its structure and focus on the logic chip business.

The South Korean firm will be led by two co-chief executives, rather than three, as it pivots on the two core pillars of chips and consumer products, such as smartphones, to help drive the next phase of growth and increase competitiveness.

Samsung, whose Galaxy flagship brand helped it become the world's largest smartphone manufacturer by volume, is attempting to resurrect flagging mobile growth, which contributed only 21 per cent of profits last quarter, down from over 70 per cent in the early 2010s.

Instead, thanks to a surge in data storage and a recent shortfall of global semiconductor supplies, its component business, led by chips, has become the most profitable.

Last quarter, the business accounted for roughly three-quarters of Samsung's operating profit of $13.4 billion.

As reported, Han Jong-hee, the head of Samsung's visual display business, will become a co-CEO, managing the newly merged division encompassing mobile and consumer electronics while also continuing to run the television business.

Han rose through the ranks of Samsung's visual display division despite having no prior expertise with mobiles.

Additionally, after previously serving as CEO of another Samsung affiliate that manufactures various types of tech parts, Kyung Kye-hyun, will manage the company's powerful components unit.

Kim Ki-nam, the former CEO of Samsung's components division, will take over as chairman of Samsung Advanced Institute of Technology, the company's research and development centre in South Korea.

Among other high-profile appointments, Chung Hyun-ho was promoted to vice-chairman and head of Samsung's business support task force, which observers believe is a primary business coordination unit for important decision-making in Samsung Electronics and its affiliates.

According to the report, Samsung has big plans to invest in advanced chipmaking to compete with Taiwan Semiconductor Manufacturing Co., while also fending off Chinese competitors with phones and other products.

Reports also claimed that Samsung Electronics wants to surpass TSMC as the world's leading semiconductor contract manufacturer by 2030 by investing $150 billion in logic chip operations, including foundries.

The company stated that the new CEOs will assist in leading the company's next phase of expansion and strengthening its competitiveness.

Meanwhile, Lee Jae-yun, an analyst at Yuanta Securities Korea said: "In the long term, the biggest challenge is forming a platform of Samsung's own. Those businesses have to keep increasing connectivity between devices, but so far, it hasn't been able to create a lasting platform with presence."

More immediate issues include a shortage of chip supplies, rising raw material prices, logistical challenges and competition from Apple, as well as Chinese rivals, according to experts, who are concerned about a weakening mobile industry.

In 2013, Samsung shifted to a multi-CEO system. At the time, the company was involved in a patent dispute with Apple over cellphones and its consumer electronics division was growing in strength.

During the same time, industry observers said that Samsung's phones and appliances operations might escape a potential conflict of interest with its components business, which sold parts to Apple and other electronics competitors.

While its de facto leader, Lee, was in prison for bribing South Korea's former president, the IT behemoth chose leadership continuity. However, later, he was granted parole. As all key decisions must be approved by him, Samsung was in a state of corporate stagnation during his absence, according to Lee's supporters.

Samsung announced days after Lee's release from prison that it would invest more than $205 billion over the following three years, a third more than its previous projections, with semiconductors as a top focus.

The South Korean giant said in November that it would invest $17 billion in a new chip manufacturing facility in Taylor, Texas.

Lee spoke with White House officials and senators on a recent business trip to the United States. He also met with Satya Nadella, Microsoft CEO and Sundar Pichai, the CEO of Alphabet, Google's parent firm.

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